For all you financial gurus

[Journer]

Ok...so i am trying to work out how benificial it would be if i owned a house during college rather than spend all of my money on renting...so...leme explain...

rent for me is usually 225-325/mo a year at a time...so the avg would be 275/mo...and i will be here for 3 more years... that comes out to 9,900 bucks that could have been spent towards a house...which will help me build some equity and boost my credit score up...assuming i didnt screw anything up...

ok...now..lets look at a devent house in this market...i found one that is a nice 3br/1.5bath good area..close to campus...etc. etc. on the market for 114...i am assuming with enough haggling and whatnot...i could probably get this house or one like it for 98-105K...

ok...get a mortgage...making 600/mo payments (30yrs) at a loan rate of 7% gives me a loan of ~94k...the rest pay w/ downpayment

according to this calc i found:

With your monthly payment of 600.00 and a 30 Year Loan at 7 %

You will have a loan of $ 90,184.54

Adding your Downpayment of $ 5,000.00 gives a total house value of $ 95,184.54

After 30 Years you will own a $ 308,721.30 house and have saved 35,228.33 in Income Taxes on Interest Payments of $ 125,815.46

Renting Analysis

Instead we take your downpayment and let it grow

After 30 years your $ 5,000.00 has increased to $ 57,791.26

the thing is...there is now way in hell that 5k is going to sit somewhere for 30 years untouched...

so..it would make more sense to just get a house...fix it up...and hopefully sell it for more than i paid after i'm ready to move...

now...lets talk about my situation in general...

my rents have enough money to easily get another mortgage and/or cosign on one for me
so does my roommate's...

what legitimate arguments could a parrent supply? Both of us are reliable kids... (although neither parrent knows of the true reliability of the other roomate) and we both have plenty of money to pay for the mortgage...because we are already doing it and have never been late for our rent...
what other arguments are there?

thanks 🙂

 

[JS80]

do you have an income?

 

[Journer]

yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

 

[vi edit]

You have to include PMI, property taxes, home owners insurance, and upkeep costs along with your P&I payments.

Those could easily work out to be another couple hundred bucks.

Be sure to to factor those in.

 

[Journer]

if you have homeowners insurance...does it work like car insurance?

like...my dad pays X amount to insure all his cars...

he has insurance on his current house...i am assuming he could just add this one on there...he gets cheap insurance..military and all 😛

how do i find out how much prop. tax is in my area? what is PMI? and upkeep would be handled by myself and roomate...he used to be a house inspecter, builder, flipper, etc...and i am good with plumming and electrical bs...

also..how do i find out how much i would be putting towards prinicple and interest? can you decide or does the bank?

 

[vi edit]

You would be very hard up getting approved. And I don't care how responsible you are, your parents would be fools to co-sign. I would never cosign for a childs loan, nor would I ever expect my parents to. Just too many things could happen and they could wreck years worth of hard earned credit history.

Your age, lack of credit history, lack of income or even consistent income will hurt you. You also can not claim your roommates rent as "income" for the loan approval.

 

[daveymark]

Originally posted by: Journer
yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

selling weed doesn't count

 

[JS80]

Originally posted by: daveymark

Originally posted by: Journer
yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

selling weed doesn't count

rofl...

yea good luck getting approved for a mortgage with your own business.

 

[tfinch2]

Originally posted by: Journer
yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

Are you a seperate entity from your business?

Are you going to itemize your deductions on your personal return? (The yearly interest on the mortgage isn't going to be more than $10k)

 

[Babbles]

It sounds great to own a house while in college, but I really think it is a bad idea. The financial and physical upkeep of a house is tremendous, and those are things you really wouldn't want to worry about.

I think you would be better off to just pay rent now and maybe after college look at buying some house - also keep in mind that you may have to move to find a job after school which is another good reason to rent now and buy later.

 

[Journer]

Vi: i know i could never get approved...why would they be fools? What things could happen? I dont pay...they sell the house (they have thoussands in savings...so IF i didnt pay they could keep the mortgage up until they sold it) ...i die...they get my health insurance...and sell the place...what else could go wrong?

davey: comptuer repair 😛

 

[JS80]

Originally posted by: Journer
Vi: i know i could never get approved...why would they be fools? What things could happen? I dont pay...they sell the house (they have thoussands in savings...so IF i didnt pay they could keep the mortgage up until they sold it) ...i die...they get my health insurance...and sell the place...what else could go wrong?

davey: comptuer repair 😛

...ruin your credit, not be able to get a good mortgage when you get married and have kids and want a big house...wife divorces you...

 

[Journer]

Originally posted by: tfinch2

Originally posted by: Journer
yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

Are you a seperate entity from your business?

Are you going to itemize your deductions on your personal return? (The yearly interest on the mortgage isn't going to be more than $10k)

yes
yes

babbles: i have to worry about it anyways...i have to worry about paying rent...and all of the landloards are slumloards...i have fixed everything in the house i am in now...cheap bastards...

as far as moving...it wouldnt be a problem unless the house didnt sell very quickly...but i could competatively price the house...shouldnt be THAT hard to sell...worse comes to worse just rent it out...30,000+ kids every year...its not hard

js80: who the hell said i was going to ruin my credit? ...jesus christ...its not THAT hard to make a 600/mo mortgage... -_-

 

[tfinch2]

Originally posted by: Journer

Originally posted by: tfinch2

Originally posted by: Journer
yah...own my own business...income varries every month...but i mostly use student loans to pay my rent right now...so instead of that money going to rent it would go towards mortgage

Are you a seperate entity from your business?

Are you going to itemize your deductions on your personal return? (The yearly interest on the mortgage isn't going to be more than $10k)

yes
yes

babbles: i have to worry about it anyways...i have to worry about paying rent...and all of the landloards are slumloards...i have fixed everything in the house i am in now...cheap bastards...

as far as moving...it wouldnt be a problem unless the house didnt sell very quickly...but i could competatively price the house...shouldnt be THAT hard to sell...worse comes to worse just rent it out...30,000+ kids every year...its not hard

js80: who the hell said i was going to ruin my credit? ...jesus christ...its not THAT hard to make a 600/mo mortgage... -_-

If you're going to itemize your deductions you're not going to be able to write off your mortgage interest on your return. It's either one or the other.

 

[Journer]

well i would just have to figure which would be a better return

 

[JS80]

i was responding to the "i don't pay them..." part.

 

[Journer]

Originally posted by: JS80
i was responding to the "i don't pay them..." part.

ahh...understood...its unlikely though

 

[Dr. Detroit]

Biggest concern you and the 'rents have is that the home will appreciate in vlaue and you will have equity.

Housing market in most of the US is in the crapper with supply side inventory at 5yr highs. Mortgage rates are expected to increase and inflation is hitting 4%. Home builder stocks have all lost more than 50% of thier inflated valus in the last few months as well.

Gambling on the housing market may not be such a good idea.

 

[JS80]

Originally posted by: Fmr12B
Biggest concern you and the 'rents have is that the home will appreciate in vlaue and you will have equity.

Housing market in most of the US is in the crapper with supply side inventory at 5yr highs. Mortgage rates are expected to increase and inflation is hitting 4%. Home builder stocks have all lost more than 50% of thier inflated valus in the last few months as well.

Gambling on the housing market may not be such a good idea.

The thing with real estate is that most people buy and hold. Even though supplies are at 5 yr highs, if the price is not right, the owner will not sell. That's one of the main reasons why RE prices are still ridiculously high.

 

[Journer]

Originally posted by: Fmr12B
Biggest concern you and the 'rents have is that the home will appreciate in vlaue and you will have equity.

Housing market in most of the US is in the crapper with supply side inventory at 5yr highs. Mortgage rates are expected to increase and inflation is hitting 4%. Home builder stocks have all lost more than 50% of thier inflated valus in the last few months as well.

Gambling on the housing market may not be such a good idea.

is it really that unlikely that if we bought a house today for 110k that it wouldnt sell for more than that in 3yrs? what about break even? i have to live somewhere...

 

[Babbles]

Originally posted by: Journer

Originally posted by: Fmr12B
Biggest concern you and the 'rents have is that the home will appreciate in vlaue and you will have equity.

Housing market in most of the US is in the crapper with supply side inventory at 5yr highs. Mortgage rates are expected to increase and inflation is hitting 4%. Home builder stocks have all lost more than 50% of thier inflated valus in the last few months as well.

Gambling on the housing market may not be such a good idea.

is it really that unlikely that if we bought a house today for 110k that it wouldnt sell for more than that in 3yrs? what about break even? i have to live somewhere...

It obviously depends on what city you live in, but on average across the country the new home prices have been pushed to compete with older home prices. Meaning that if you bought a house now for ~$110k and in three years you decided to sell, it is very possible that you may only break even on the cost of the house but still lose money in the long run due to various fees. It is very likely that somebody could get a new house for around that figure, so why would they buy your used house?
Again each city is different, but that has been average trend as of late.

Originally posted by: Journer

babbles: i have to worry about it anyways...i have to worry about paying rent...and all of the landloards are slumloards...i have fixed everything in the house i am in now...cheap bastards...

as far as moving...it wouldnt be a problem unless the house didnt sell very quickly...but i could competatively price the house...shouldnt be THAT hard to sell...worse comes to worse just rent it out...30,000+ kids every year...its not hard

js80: who the hell said i was going to ruin my credit? ...jesus christ...its not THAT hard to make a 600/mo mortgage... -_-

Again, I think you are missing the point in how difficult it is to just maintain a house when it is all you. Fixing the oddball thing around the house is no big deal, but major problems are a big deal.
Additionally maybe your mortgage will be $600, but you need to also figure insurance, property taxes, utilities, and maintenance costs. Look at other things you would have to purchase if you bought a house:
Do you need a lawnmower?
Other lawn maintenance?
What about pest control?
How is the HVAC? Going to replace that anytime soon?
Dishwasher, laundry, sink, refrigerator, how are the appliances?

What I am trying to point out is that you seem to really only see the mortgage cost each month, be it $600 or whatever, but in reality you have much higher expenses than that. Hell you probably really need to have something like $1200 a month to take care of everything.

Also as somebody else said with your age and lack of income, the chance of you being approved for a mortgage is pretty low and even if you did your interest rate would probably be pretty high - or at least I would think.

I think it is great that you are thinking about this, but I just believe that the reality is you are in no position to purchase a house at this time. Go to school, pay over-priced rent, graduate, move and get a job and a couple of years after school revisit the this home buying thing.